Gov. John Bel Edwards listens to a series of questions from Rep. Lance Harris, R-Alexandria, during the Governor's appearance before the Joint Legislative Committee on the Budget and presentation of his plan address the $304 million budget deficit for the current year, Friday, Jan. 27, 2017 at the State Capitol.

S&P downgrades Louisiana's credit rating, citing budget instability

Gov. John Bel Edwards listens to a series of questions from Rep. Lance Harris, R-Alexandria, during the Governor's appearance before the Joint Legislative Committee on the Budget and presentation of his plan address the $304 million budget deficit for the current year, Friday, Jan. 27, 2017 at the State Capitol.

Gov. John Bel Edwards, who has called on the Louisiana Legislature to overhaul the state's budget in the session that begins next month, said that the ratings agencies' actions are proof of the need to rein in the state's finances.

“The credit rating agencies are echoing what I, and many in the Legislature, have said for a long time – structural tax and budget reform is critically important for our state’s future," he said in a statement Wednesday. "There is a responsible way that we can reform our tax structure to make it fair and predictable for businesses and also bring in sufficient revenue to support the state services a vast majority of state legislators believes is important to maintain for their constituents."

State lawmakers last year approved a temporary sales tax hike to shore up the budget, with plans to conduct a more in-depth structural reform this year.

Jan Moller of the Louisiana Budget Project, which advocates on behalf of low and moderate income people, said that the state's third downgrade should convince legislators to consider personal income tax when it reviews the budget. A task force that submitted recommendations to the Legislature included proposed changes to the state's income tax brackets in its report.

"It's something that has to be on the table when they sit down to look at the tax code," Moller said. "Everybody who has looked at this issue understands you have to look at the income tax as part of a reform solution."

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